Pension contributions are not the only cover the Act asks for. A second rule sits next to them.
A separate duty, not part of the pension itself
The Pension Reform Act tells an employer to hold a group life insurance policy for its staff. The minimum cover is three times each employee's annual total emolument.
This is not the retirement savings account that pension contributions build up. It is a different kind of cover. It is there to pay death claims for employees. An insurance premium funds it, not monthly pension deductions.
What happens without a valid policy
The Act is blunt about this. Skip the cover, and the employer pays any death claim itself. No insurer stands behind the business at that point.
There is a second cost too. A current group life policy is required for the PenCom clearance certificate. A clean pension record does not make up for it. A missing or lapsed policy leaves a gap in the application, even when every remittance was paid on time.
When the premium is due
The Act ties the premium to one clear date: the day the cover starts. Pay it by then. Treat that date as its own deadline, not a task to fit in once a certificate application is already moving.
Where it appears on an application
PenCom asks for a current policy showing the staff covered and the sum assured, alongside your remittance history and staff list. All three belong to the same application, for the Pension Clearance Certificate. Our how to apply guide sets out the full document list a first-time application needs.
PenCom's renewal list includes group life insurance too, so a renewal asks for proof again. What matters is that the policy is current. Treat every renewal as a fresh check, not a formality that repeats last year's paperwork.
Keeping the policy current between renewals
It is easy to treat this policy as a box ticked once and forgotten. That is the mistake. The policy has its own renewal date, separate from the certificate itself.
If that date falls between two certificate applications, cover can lapse for months with nobody noticing. Put the policy's renewal date on the same compliance calendar as your other certificate deadlines. Do not track it from memory alone.
Ask your insurer or broker for a renewal reminder, and note the date the current cover ends. Keep the policy schedule with the rest of your PenCom file.
Common mistakes
- Assuming pension contributions already cover this duty, when it is a separate policy.
- Letting cover lapse between certificate applications, since nothing else flags the renewal.
- Finding the gap only when PenCom's review catches it, instead of checking first.
- Paying the premium late, after cover was meant to have already started.
For the rest of what a clearance certificate application asks for, see PenCom certificate renewal: documents checklist and the tender compliance hub.